Jordan Has Taken Charge of the Mediterranean Union
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By Antonia Dimou
The Center for Strategic Studies at the University of Jordan issued an evaluation report authored by Mohammad Nabulsi on the implementation of the Jordan-EU Action Plan. The report tackles the Economic and Social Reform and Development and highlights Jordan’s progress in Monetary, Exchange Rates and Fiscal Policies.
The aim of the Jordan-EU Action Plan is to consolidate progress in macroeconomic stabilization and growth policies through mechanisms such as implementing a national macroeconomic stabilization program and to consolidate achievements with regards to price stability, strengthening banking regulations and supervision, lowering public debt and fiscal stability and continue policies for achieving a sustainable fiscal and pension system.
Jordan has made a significant effort to reduce the budget deficit, although this reduction was made possible mainly through grants and donor’s assistance. Because of the rise in global oil prices, a country like Jordan with minimal resources remains largely dependent on international support.
Today, Jordan has survived the global economic crisis as the Central Bank played a significant role to ensure the safety of the banking system while maintaining monetary stability.
The Central Bank of Jordan stresses the capital adequacy. Setting 12% as a percentage for capital adequacy has preserved the banks from any financial problems and led to a zero percent probability of bankruptcy. The world standard for capital adequacy does not exceed 8%; however, Jordan has used a conservative banking system in order to save its banks, based on the experience with problems that certain Jordanian banks faced in previous periods.
Jordan has continued its progress in enhancing the investment climate and developing its privatization programs. An Investment Promotion Law was approved in 2006 to contribute to investment regulatory simplification.
The aim of the Jordan-EU Action Plan is to consolidate progress in macroeconomic stabilization and growth policies through mechanisms such as implementing a national macroeconomic stabilization program and to consolidate achievements with regards to price stability, strengthening banking regulations and supervision, lowering public debt and fiscal stability and continue policies for achieving a sustainable fiscal and pension system.
Jordan has made a significant effort to reduce the budget deficit, although this reduction was made possible mainly through grants and donor’s assistance. Because of the rise in global oil prices, a country like Jordan with minimal resources remains largely dependent on international support.
Today, Jordan has survived the global economic crisis as the Central Bank played a significant role to ensure the safety of the banking system while maintaining monetary stability.
The Central Bank of Jordan stresses the capital adequacy. Setting 12% as a percentage for capital adequacy has preserved the banks from any financial problems and led to a zero percent probability of bankruptcy. The world standard for capital adequacy does not exceed 8%; however, Jordan has used a conservative banking system in order to save its banks, based on the experience with problems that certain Jordanian banks faced in previous periods.
Jordan has continued its progress in enhancing the investment climate and developing its privatization programs. An Investment Promotion Law was approved in 2006 to contribute to investment regulatory simplification.
According to statistics, investments benefiting from the Investment Promotion Law increased in 2008 to reach JD 2.268 million compared to JD 2.221 million in 2007. Also, JD 310.7 million of investments in special development zones can be added to the total investments of 2008. EU investments in Jordan favored from the Investment Promotion Law for the period from 1996-2008 amounted to JD 705,234.696 whereby, 44% of these investments were industrial.
On the issue of Money Laundering, Financial and Economic Crime, 2007 witnessed the birth of the Anti-Money Laundering Unit under Law No. 46. According to Dr. Ummaya Toukan, Governor of the Central Bank and Chairman of the Anti-Money Laundering Committee, the unit commenced with executing its mandate efficiently in 2008, and its main duty is technical with regards to tracking money laundering and providing competent local authorities with information when needed.
Between 18 June 2007 and 18 July 2008, the Unit received 81 notifications of suspicious transactions, of which 68 notifications were submitted by banks, 9 from monitoring bodies, 3 from exchange bureaus and 1 from a financial corporation. These cases would not have been received by the Unit had it been part of the Central Bank.
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